CFTC Collaborates With MLB and Major US Sports Leagues to Combat Prediction Market Insider Trading

(AsiaGameHub) –   The Commodity Futures Trading Commission (CFTC), a leading U.S. financial regulator, announced its collaboration with Major League Baseball and other major sports leagues to combat insider trading in prediction markets.

The agency pledged to partner with sports organizations to identify suspicious trading activities and take action against attempts to manipulate sports-related contracts on platforms such as Kalshi and Polymarket.

The CFTC has already established a memorandum of understanding with MLB, according to the agency’s chairman Michael Selig. Selig made the announcement during this year’s Financial Industry Regulatory Authority conference, as reported by CoinDesk.

“We are currently engaged in discussions with all professional sports leagues,” Selig added.

Selig also rejected claims that sports prediction markets were merely a modern version of casino gambling.

“These are distinct products governed by parallel regulatory frameworks,” he stated.

CFTC: Insider Trading Will Be Prosecuted

Selig has been vocal about regulating prediction markets. Earlier this month, he responded publicly to critics in a letter to the Wall Street Journal, refuting allegations that insider trading is widespread on these platforms.

“Claims that our insider trading rules are less defined than others are entirely false,” he wrote. “The CFTC remains a vigilant overseer of prediction markets.”

He cautioned that efforts to “drive regulation out” could push prediction markets offshore, where they would operate without oversight or standards.

“These markets deliver substantial benefits to individuals, businesses, and the broader economy,” Selig emphasized. “We are committed to maintaining their integrity and supporting their growth.”

His remarks followed an op-ed in the Wall Street Journal that characterized prediction market contracts as “old-fashioned betting.”

The article noted that approximately 90% of activity on Kalshi is related to sports.

Regulator Set to Clash With States

The CFTC is preparing for conflict with state governments. Lawmakers across several U.S. states continue advancing legislation aimed at banning prediction markets.

Earlier this month, Minnesota legislators approved a bill prohibiting various forms of prediction market activity, including those tied to sports.

Additionally, multiple tribes in New Mexico have filed a lawsuit against Kalshi, alleging the platform violates Indian gaming law by offering illegal gambling services.

Nevada has taken even stronger measures: in March, the state successfully obtained a court order that temporarily halted Kalshi’s operations in Nevada.

This ban was upheld and extended by a Nevada court last month.

The CFTC has signaled it will challenge states attempting similar restrictions. Selig warned that the agency would pursue legal action against any state seeking to ban prediction markets without federal approval.

“Under the Commodity Exchange Act, the CFTC holds exclusive jurisdiction over prediction markets,” Selig wrote. “While some may express skepticism toward innovative financial instruments, we remain steadfast in defending our authority and protecting it.”

The Long-Term Outlook

Last year, gaming consultancy Eilers & Krejcik projected that sports contracts would represent 44% of total volume on prediction markets over the long term.

The firm also forecasted that annual trading volumes could reach $1 trillion by the end of 2029.

Earlier this week, the New York Times reported that 80 accounts on Polymarket had exhibited suspicious betting behavior over the past two years.

The newspaper noted that these account holders had profited significantly from “dozens” of longshot bets, earning hundreds of thousands of dollars in cryptocurrency.